Organizational Culture:

A guide for CEOs by

How to Navigate theWaters of Change

Contents

Why is Organizational Culture So Important?

7 Myths About Organizational Culture Every CEO Should Know

The Iceberg of Organizational Culture Change

Finding The Right Culture Assessment Instrument

Preparing For Successful Organizational Change

How to Change Your Organization’s Culture: 6 Tips

Closing Thoughts

Why Is Organizational CultureSo Important?

There’s no doubt that corporate culture is having a moment. Just last year, Merriam-Webster recognized culture as their Word of the Year, and most of Glassdoor’s Best Places to Work made the

list primarily due to their organizational cultures.

Whether it’s visionary companies like Buffer, Google, or Zappos, or the consistent performance of Wegmans and Chick-fil-A, there is now more awareness than ever about how important organizational culture is to a company’s long-term success.

The problem, however, is that culture is still talked about in an ethereal way. It’s placed on a pedestal in today’s most successful organizations, but it is largely misunderstood beyond the idea of employee perks, benefits, or hiring for “culture fit.”

As you dig deeper into the definition of organizational culture, you will realize the critical role it plays as a foundation for many other business outcomes. While not a complete list, here are a few of the performance metrics driven by a high performance culture:

“An organization, no matter how well designed, is only as good as the people who

live and work in it.”

-Dee Hock

3 Performance Metrics Driven By Culture

1. Employee Engagement:According to Gallup, organizations with above-average levels of employee engagement reap 147% higher earnings per share. Furthermore, when organizations engage both customers and employees, they experience a 240% jump in performance-related business outcomes.

Create an environment your employees enjoy: a culture that supports their enthusiasm and engagement. Take care of your employees, and they will, in turn, take care of your customers and business.

2. Employee Retention: Multiple studies suggest that today’s employees intend to stay in their current role for an average of 3 years. Even today’s more senior employees have changed jobs an average of 11 times over the course of their professional lives, according to the Bureau of Labor Statistics.

By motivating your team beyond extrinsic rewards and incorporating more intrinsic motivators like professional or personal development programs, you’ll spend fewer resources on hiring and onboarding while gaining the benefits of their experience and expertise over time.

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3. Customer Experience: According to a report released by McKinsey, 70 percent of buying experiences are based on how the customer feels they are being treated.

Your customer service and sales teams are on the front lines of your business, creating your customer experience on a daily basis. If you don’t have an empowered, engaged workforce handling new business and customer issues, you may be damaging your reputation and overall performance one customer interaction at a time.

How Can You Help Create the Culture You Desire?Despite the rising awareness regarding the importance of culture in business, research continues to suggest that leaders know organizational culture is important; they just haven’t figured out how to leverage it to drive business results.

It may already be clear to you that your culture is not reaching its fullest potential, but it cannot be left alone in hopes that it will fix itself. Someone must be willing to start the conversations needed to ignite change.

You may be the catalyst your organization needs. How will you lead the change?

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Key Takeaways

• Your culture is made up of the collective assumptions, values and behaviors of everyone in the organization.

• Research shows that culture can shape behaviors that drive success by improving performance outcomes like employee engagement, retention and customer experience.

• Leaders play an integral role in proactively aligning their organizational culture and strategy in order to drive performance.

7 Myths About OrganizationalCulture Every CEO Should Know

Many thought leaders today are talking about company culture as if it’s akin to capturing a unicorn. It carries a romantic and mythological appeal that makes it an irresistible topic of conversation, but

many still haven’t fully figured out how to effectively shape culture to drive the right behaviors in their organizations.

Unfortunately, a lack of rigor in process and a lack of real-world experience make it challenging for these thought leaders to help businesses understand and harness the power of their cultures. As a result, when it comes to measuring bottom-line performance metrics like profitability, sales growth and market share as they relate to culture, they have yet to connect the dots between fact and fiction.

“If you do not manage culture, it manages you, and you may not even be aware of the

extent to which this is happening.”

-Edgar Schein

Myth #1: “Culture is a silver bullet that will take away all of our problems.”Business today is extremely dynamic, involving increasing numbers of stakeholders who demand more input and control than ever before.

True cultural transformation often requires a multi-pronged approach to achieve the results you require while aligning your workforce around your goals. For example, clarifying and aligning stakeholders around the strategy is not enough. You must support that effort by providing people with the tools and skills to do what you are asking of them and adapting systems and processes to improve work flow through the change.

Myth #2: “Culture takes years to change.” This is not wholly untrue. It does take time for collective norms and ways of working to develop and, through success, become more entrenched in the collective mindset as the “right way to do things.” The longer that way of doing things remains the norm (and the longer that way meets with successful results) the harder it is to change it.

That said, culture can change quickly. It usually takes a “gut punch” to the organization that clearly shows the old ways of doing things are no longer going to cut it in today’s evolving business environment.

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Myth #3: “It’s HR’s job to worry about stuff like this.”While HR can, and often does, play a critical role in the culture assessment and evolution process in many organizations, one fatal pitfall is when executives extend that role to include ownership of the entire process.

Culture is a collective concept and, as such, should be owned by the collective. All members of your organization need to be involved in both understanding which aspects of the culture will help drive success and which may need to change in order to keep the organization relevant in changing business environments. This is everyone’s responsibility. Leaders cannot simply delegate responsibility for leading these critical types of changes within their organization.

Myth #4: “It’s the job of senior leadership to drive culture and performance.” Similar to Myth #3, some people operate under the assumption that a CEO or senior leader alone drives culture and performance. While senior leaders certainly have the ability to significantly influence in this arena, they do not own it in its entirety.

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Myth #5: “We can’t manage what we can’t measure.“ The term “organizational culture” is pretty tough for many people to wrap their heads around in a consistent and meaningful way. Culture can cover any number of aspects of organizational functioning. It evolves constantly based on what seems to be working in the current business context and it consciously and subconsciously influences people to behave in certain ways. Often, employees are not even aware of how it’s affecting their everyday work.

There are many aspects of culture that continuously play a role in shaping the thoughts and behaviors of employees in the day-to-day, but only some of those have been studied rigorously and have been found to be directly linked to performance.

If you’re working to understand your current culture and how it may be impacting the performance of your business, start with the aspects of culture that have linked performance through empirical research; not just someone else’s opinions.

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Myth #6: “We can do this internally.” In other words, you and your team were involved in creating the culture, so it’s up to you to fix it. Yes and no.

In many instances, organizations find it difficult to assess and evolve their own culture because so much of it resides in the collective subconscious and is taken for granted in the day-to-day. Because of this, it is often much more beneficial to engage with a team of external experts who can examine your organization with fresh and unbiased eyes.

This gives you the ability to dig deeper into the beliefs and assumptions that are driving behavior than you could ever hope to get to on your own. External experts also bring proven methodologies and structure to the process to help expedite your efforts.

Additionally, in many organizations people may not always feel comfortable opening up to internal colleagues in the same way they might with an external advisor. An objective third party can help facilitate a more honest conversation and assessment of current beliefs, assumptions and behaviors.

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Myth #7: “There exists one clearly defined, all encompassing culture in an organization.”When you are leading large organizations that span multiple professional specialties or geographic locations, it’s unlikely that the entire organization has one seamless way of doing things that governs behavior in exactly the same ways.

While there are often some values and ways of doing things that generalize across the entire collective, very often there are also subcultures that may, in some cases, be at fundamental odds with each other. Even when values are shared across large organizations they may tend to manifest themselves in different ways. For example, empowerment may be a valued concept, but may play out very differently in your San Francisco office than it does in your Shanghai office.

This can also be exemplified through professional subcultures that exist within your organization. Think of the health care system. Doctors have deep and explicit beliefs and values linked to their profession. They work with many other stakeholders and subgroups, such as nurses and administrators who may not value the same things in quite the same way. Taking a “one size fits all” approach to culture can create some real problems in environments like this.

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Key Takeaways

• Stick to the facts. Many aspects of organizational culture have been empirically linked to business performance.

• There is no silver bullet solution that will solve your business performance issues.

• Culture is a collective concept. Every stakeholder should ideally be engaged in the process if they are to be invested in the results.

The Iceberg ofOrganizational Culture Change

87% of today’s leaders around the world cite culture and employee engagement as their top organizational challenges. This is according to a recent report from Deloitte, including data from

over 3,300 executives and HR leaders in 106 countries.

The data in this and other large-scale studies weave together an alarming trend around today’s changing corporate landscape: Changing demands of the emerging workforce and looming leadership development challenges are growing risks for business today.

Organizations must find ways to adapt to the changing needs of their stakeholders and dramatic changes in the business landscape in order to maintain long-term levels of high performance.

Organizational culture change at any scale can be challenging. And in order to overcome challenges like these, you often have to dive into the depths of your organization to discover what is truly driving behaviors below the water line.

“One of the most important insights about the need to bring about deep change in others has to do with where

deep change actually starts.”

-Robert E. Quinn

Most people think of culture as the visible values and behaviors within an organization; shaped by employee perks and benefits, the office policies and environment, and the corporate brand and

values.

These are all manifestations of your culture, but like an iceberg, the majority of what drives the behaviors within your organization is unseen and largely inaccessible, living far below the surface of what anyone in your company consciously thinks about.

“The way things get done around here” is our favorite catchall definition of organizational culture. We see it in the stories employees tell about their organizations, the conversations they have with each other, and the way they go about their daily work.

But these visible indicators are only part of the story. The area below the water line of your organization is what drives those visible behaviors.

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Seeing Below The Water LineAre any of these indicators visible in your organization? If so, it may be time to dive deep into an analysis of the underlying issues that may exist in your organization.

In our experience, we’ve found that successful and sustainable organizational culture change starts with a rigorous assessment.

You may not see more than the tip of the iceberg at first glance, but by having conversations with your people, asking the right questions, and digging deep into the motivations driving why you’re doing things the way you’re currently doing them today, you’ll be able to better understand what needs to change.

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Key Takeaways

• Visible behaviors are only the tip of the iceberg. You will likely need to uncover the deeper values and assumptions in your organization if you want to effectively and sustainably change.

• Focusing on superficial or external motivators is not enough to change behavior.

• Organizational change starts with a rigorous assessment.

Finding The Right CultureAssessment Instrument

When was the last time you caught a cold? What did you do about it?

If you’re like most of us, you probably assumed it was harmless and started treating it the best way you know how—with over-the-counter cold meds or other natural alternatives.

After a week or two, if it didn’t go away or got worse, you might have gone to a doctor to get a proper diagnosis. And by then, what started as a cold may have turned into a completely new infection that required something stronger than what’s on the shelf at your local pharmacy.

Organizations function a lot like this. Some problems can be addressed by making small incremental adjustments. Like a cold you self-diagnose, you may be able to rectify the situation without any extreme intervention. If the problem worsens or compounds, however, you may find yourself needing a proper diagnosis to assess the situation and identify the root cause of your pain.

“It is not enough to do your best; you must know what to do, and then do your best.”

-W. Edwards Deming

An Accurate Diagnosis Starts With A Valid and Reliable AssessmentAs a leader, you need to know which aspects of culture are directly linked to business outcomes like sales growth, market share, customer and employee satisfaction and safety because assessing culture for culture’s sake isn’t enough. You need to understand how the current culture is driving performance and how it may be holding you back in real business terms.

In the years we’ve been helping organizations assess and understand the impact their cultures have on driving the right behavior, we have tested several of the more popular assessments and have, time and again, come back to one survey that best serves our clients by addressing these needs.

Our quantitive assessment tool of choice is the Denison Organizational Culture Survey (DOCS), which we use as the foundation of our culture research whenever it makes sense to do so. Designed by Dr. Daniel Denison while at the University of Michigan, the DOCS is one of the few culture assessment instruments that is rooted in a deep base of empirical research.

We feel it not only provides meaningful data that our clients make use of, but is also a valid and reliable measure of various aspects of culture that have been empirically linked to bottom-line business performance. A critical component that makes culture tangible for business leaders.

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A deep empirical research base.

An intuitive representation of data that can be quickly understood and utilized to drive change at all levels.

The ability to compare your organization to others rather than to a mean score.

The ability to create a baseline from which to compare future results and measure progress.

The ability to deploy it online and in paper format in a wide variety of languages.

The ability to adapt the standard survey to hone in on specific areas of interest to your leadership team.

The ability to cut data by any number of demographics to gain a deeper understanding of trends.

A prescriptive model of what should be important, rather than what people think the culture should be.

8 Things Your Culture Assessment Should IncludeNote that we do not advocate for only using a survey to understand a topic as complex as organizational culture. When paired with a rigorous qualitative research component, a survey instrument can be helpful in actively engaging a large audience of stakeholders and establishing a quantitative baseline from which to measure your progress over time.

Whether or not your organization chooses to use the Denison Organizational Culture Survey, it’s important to understand what makes it our quantitative assessment of choice.

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Key Takeaways

• Sustainable change starts with an accurate diagnosis. Without the proper assessment, you may end up treating the wrong symptoms.

• The culture assessment instrument you use should ideally include most of the 8 qualities listed in order to effectively adapt it to your needs.

• Don’t rely on a survey alone. Qualitative research in the forms of focus groups and 1:1 conversation is also needed for an accurate diagnosis.

Preparing For SuccessfulOrganizational Change

While most of your employees likely understand that their primary responsibility at work is — well — to work, we’re guessing that they don’t want to be treated like mindless drones in the process.

In today’s hyper-connected world, employees are making their voices heard: They want to be part of organizations that stand for something. They want to align themselves with a corporate culture that fits their own beliefs and values. A place where they can bring their best selves and contribute in ways that make a difference.

So, before you dive headfirst into the process of valiantly changing your culture single-handedly, take a step back and realize that your employees may want to be a part of the process.

What type of culture must exist in order to drive the behaviors you need to succeed? And how can you help navigate the change necessary to create that environment—one in which your employees are actually invested in the outcomes?

“The greatest danger in times of turbulence is not the turbulence; it is to act with yesterday’s logic.”

-Peter Drucker

Unfortunately, there’s no single recipe for developing a company culture that drives the performance you’re looking for. Your organization’s unique history, goals, values, and ways of working determine

what culture exists and your strategy determines what culture you need to be most successful.

Rather than focusing on what you believe will achieve your desired performance, your efforts are better served focusing on what workplace changes will help your employees behave in the ways that align with the execution of your strategy. If your current culture is preventing your employees from doing their best work, that culture needs to change.

Here are some things to consider, before you get started:

Don’t Wait If you know that your culture is ineffective at driving the behaviors you need from your team, don’t hide behind the delusion that it will magically improve once business picks up or your company’s structure evolves.

Your toughest competition is assessing and evolving its company culture all the time, reacting to changes in the market before they happen and intentionally designing its culture to encourage productive employees. Don’t wait to start creating the culture your company needs in order to have a leg up on your competitors.

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Be RigorousOrganizational change is tough, complex and is sometimes not very sexy. It’s imperative that culture change efforts be conducted in a methodical way, the details are managed and actions are coordinated across the organization.

A comprehensive evaluation plan should also be developed so that outcomes can be understood. If we’re not measuring our progress in terms of business outcomes, how do we know if we’ve been successful? Worse yet, how do we know when what we’re doing isn’t right and we need to change course?

Call In An Expert Look, as consultants in the culture space, we realize this may sound very self-serving. But how can you expect to successfully lead a culture change effort with little to no expertise on the topic? That’s akin to performing open-heart surgery on yourself: Even if you’re a cardiac surgeon it probably isn’t advisable.

Navigating your company’s culture change effort can be tricky when you’re right in the middle of it. When you’re at the helm, it’s especially tough to objectively see problems at different levels of your organization.

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Calling on an experienced outsider can help you understand the changes you need to make and guide you toward a plan to implement them. It can be difficult to embark on a new direction for your company alone, and it’s especially hard when you’re accustomed to a certain way of doing things.

Take ResponsibilityOutside experts can help you navigate your journey, but you’re ultimately responsibility for guiding your organization through the change effort.

Leaders who assume they can just outsource their culture will forever be disappointed with the result. If your organization needs people to behave in different ways to drive success, then be prepared to step up and lead.

This means role modeling and talking with stakeholders about why change is necessary. It means removing obstacles so that others can help drive change throughout the organization. And it requires you to be conscious about how you behave in every situation because what you say and do sends very clear messages about what you value.

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Understand That Culture Is a Team EffortCulture is a collective concept and it must be discussed, evolved and celebrated by the collective. This doesn’t end at the front doors of your office either. The most successful culture shifts we’ve experienced are those where efforts engage all stakeholders (internal and external) in the process.

Make your team members feel valued by soliciting their input on business issues. From the lowliest cashier to the highest executive, make sure everyone has a say. All employees should feel like they have ownership in your organization’s culture and future; not just the top executives.

Keep GoingThe most effective culture shifts I’ve experienced are those organizations that take the above advice to heart. They’re not out for some quick wins so they can claim victory. They are the organizations and leaders who play the long game. They are the organizations that don’t view culture as a “project” but, rather, as a fundamental, collaborative dynamic in their organization that has a massive impact on peoples’ behavior.

Taking the time to be intentional about clarifying and aligning your organizational strategy, leadership and culture is an ongoing effort. As the business environment evolves, so must the way you operate.

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Key Takeaways

• Your employees want to be involved in the process. If you want them to be invested and engaged, make sure you’re giving your employees ownership over the processes and outcomes.

• Culture can be a competitive advantage. Don’t wait until it’s too late to change, or you may fall behind before you begin.

• Culture is always evolving. A high-performance culture is not a destination. It’s a constantly evolving and collaborative dynamic that can help your organization reach its performance goals.

How to Navigate OrganizationalCulture Change: 6 Tips

Today’s successful business leaders understand the importance of creating a high-performance culture within their organizations and the benefits that come with it. Many have taken the time to assess and

articulate their organization’s shared values and to gain a deep understanding of how their attitudes and behaviors shape and impact their current organizational culture and position in the marketplace.

But when it comes to changing your workplace culture, this deep assessment is only the beginning of a much larger process. How do you, as a leader, get everyone onboard and actively engaged in the process of mapping out tangible next steps that drive action?

Here are six tips to consider as you begin to embark on your cultural evolution:

“There is at least one point in the history of any company when you have to change dramatically to rise to the next level of performance. Miss that

moment - and you start to decline.”

-Andy Grove

1. Understand your current culture. First and foremost, it’s critical have a complete and accurate understanding of your current culture. Be able to fully answer these questions: In what ways does your current culture align/misalign with your company’s values? What behaviors are your current systems and processes rewarding or disincentivizing?

It’s essential for your culture to align with the ideas, values, and behaviors of your organization’s most important stakeholders: employees, vendors, shareholders, and customers.

2. Understand your position. Next, you need to have a strong grasp on your current and future market position. Though the internal culture of your company is ultimately what you want to change, it’s important to consider what the market is going to demand of you. This understanding of your position leads to the development of a sound strategy aimed at ensuring you succeed in the market and you culture must be evolved in such a way as to elicit the behaviors you need from people to deliver on that strategy.

With these elements in mind, you can determine how your changes will help you stay competitive in the market for a long time to come.

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3. Start a dialogue. At this point, you’re ready to have some meaningful discussions with the people in your organization about the first two steps. This will ultimately help your staff understand why the company needs a cultural change: Certain aspects of your current model will not help you succeed in the future.

This engagement and dialogue is absolutely critical because your company as a whole determines your culture and, if anything is going to change, they need to be actively involved. Everyone must fully understand what parts of the current culture is holding the company back, what needs to change, and how these changes will contribute to the company’s long-term success.

4. Don’t boil the ocean. Sometimes we see an opportunity to improve and we want to immediately tackle it head-on. That’s not necessarily a bad thing, but it can be dangerous. Don’t try to change your culture over night; you’ll bite off more than the members of your organization can chew.

The most successful companies we’ve worked with over the years are those that have been able to prioritize their change efforts and address only a handful at a time. Once they are satisfied with the results, they move onto tackling a few more. This iterative method of change ensures that the new behaviors will be successfully adopted by your organization over time, leading to more sustainable results as you build on them.

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5. Align systems and processes.Once your organization has figured out the necessary cultural changes, it’s time to be very intentional about evolving your systems and processes as well as making sure they align with and reinforce those behaviors. These systems and processes include recruiting, onboarding, compensation, performance management, and more. Your evolution is not complete until your work structure also reflects the culture you’re striving to build.

6. Be a role model.In order to show people that it’s safe to behave in new ways, you need to lead by example by engaging in those new behaviors yourself. Showcase these values to your team, reward members who exhibit them, and treat any day-to-day slip-ups as learning experiences, not punishable situations.

By role modeling and finding opportunities to reinforce needed behaviors, leaders are able to help their teams bridge the gap between the current culture and the way of the future.

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Key Takeaways

• Consider both internal and external factors. Your market position shouldn’t be ignored if you want to stay competitive

• Don’t take on too much at once. Be thoughtful about your approach to culture change so it doesn’t become too much to handle.

• Understand that you’re a role model. Throughout the change process, you should be modelling the behaviors and values you want to see reflected by your organization.

Closing Thoughts

If culture is defined as “the way things get done around here,” the ways of doing things that organizations develop through trial and error, over time, are the things that drive behavior and

performance.

Organizations that are able to set very clear and aligned values and processes will consistently outperform those that cannot. Furthermore, leaders who understand when it’s time to do things differently in order to stay relevant are those that are best able to adapt their organizations to changes in the business environment.

While it sounds simple in theory, its much more difficult to pull off in reality.

The challenge that leaders face in creating high performance cultures is overcoming the deeply rooted assumptions and behaviors that aren’t doing their organization any favors.

Does that mean it’s impossible? Absolutely not.

To make that happen, you as a leader must be willing to take a hard look in the mirror with your colleagues, dig deep into what needs to change, and help your entire organization let go of the behaviors that are no longer serving its goals.

To learn more about gothamCulture and how we can help navigate organizational change, visit us at

www.gothamculture.com

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